Above the Fold

Value Is Back in Vogue

There are a multitude of disciplines when it comes to investing. Some seek out startups with the hope it will disrupt an industry, others look for better-established companies that are quickly growing organically or through a flurry of acquisitions. Each strategy certainly has its risks and potential rewards, but one tried-and-true approach, which lost its luster a bit during the last decade as investors chased high-flying tech, is making a comeback. According to the Wall Street Journal, “Up to last Thursday, large value stocks beat more expensive ‘growth’ stocks by the most of any 50-day period since the technology bubble burst in 2000-01, with the exception of the post-vaccine rebound early last year.”

Value investing is a method where investors seek out companies that are relatively cheap based on their earnings, book or other metrics; with the intention of capital appreciation and lower relative volatility than stocks in other classes. Many of these value-type corporations tend to operate larger, more stable businesses, with stable (not meteoric) growth. A vast majority of this segment also offers a dividend, which is essentially a monetary payment for owning (and holding) the stock over time. 

Interest rates also play a big factor here as rising rates increase the forward value of money and, in essence, devalue future earnings of big growth companies. Lower cost, better value and low duration (high dividends) can all contribute to the lure of value stocks in volatile, rising interest rate markets. Of course, selecting the right value stocks takes some research. 

Three Things 

1. Alphabet Achieves New Record – Google parent Alphabet set an all-time record for revenue in 2021. For the full year, the company raked in $257 billion, a 41% leap versus 2020. Advertising sales saw huge increases, as did demand for its Pixel smartphone. Ironically, the company registered an $890 million loss in its cloud division. Alphabet will also split its shares 20-for-1 in July, a joyous moment for smaller investors who may want to purchase stock.
2. Peacock Shifts Strategy for Winter Olympics – Comcast’s Peacock streaming service (which is operated under its NBCUniversal arm) is hoping to recapture subscribers for the upcoming Olympics in Beijing by offering full-live access to all viewers on its platform. The fledgling digital media company disappointed many during the Tokyo Summer Olympic Games as only select games were shown live, if at all. NBC will also broadcast live on its network. 
3. Ford Doubles Down on Electric Vehicles (EVs) – Having already stated it will spend $30 billion on electrical and autonomous vehicles by 2025, the company will reportedly add another $20 billion to reorganize its business to focus on electric mobility. Ford is tapping former Tesla and Apple executive Doug Field to head the reorg and is even considering a spinoff of a (small) portion of its EV business as a special acquisition company (SPAC) to attract larger, more diverse investors. 

Did You Know? 

Keep Your Winter Wear Ready…

Pennsylvania’s famous weather-predicting groundhog, Punxsutawney Phil, apparently saw his shadow yesterday. And in case you’re not up to snuff on rodent lure, that means he’s calling for six more weeks of winter weather. The good news is that he’s likely less precise than the self-proclaimed 80% accuracy of the Old Farmer’s Almanac. According to the National Centers for Environmental Information, the woodchuck has only been right 40% of the time.